Seeing we are in the middle of summer and many people are on vacation, this update will be kept brief. For the past few months, I have been showing the possibility of a sideways trend within a rising trend. With last month’s price advance, I believe the secondary sideways trend is now off the table, which results in us focusing on the primary rising trend. Here’s the updated chart:
THE S&P 500 PRIMARY TREND: RISING
Chart courtesy of StockCharts.com
So far, the market pattern is unfolding as I illustrated in Chapter 5 of my book Protecting The Pig. When the market experiences what I call a Channel Correction, it usually takes approximately 2 years to get back to new highs from the initial high. Here we are approximately 18 months from the initial “high” and if the market continues in this manner over the coming months, the market may make new all-time highs by the turn of the year.
I’m happy to report that having reviewed a sample of client accounts, all are at new highs already compared to where they stood at the end of calendar year 2021. I believe this is one of the potential benefits of our investment strategy. When we can successfully limit investment loss, it affords us the opportunity to reinvest at lower prices. This can help save our clients from losing time and money compared to aimlessly riding the stock market roller coaster up and down.
THE “BLUE LINE”: A CLOSER LOOK
Chart courtesy of StockCharts.com
The S&P finished the month of June 8.46% above the Blue Line, compared to 3.31% above the Blue Line at the end of May. Thank you for reading this update and I hope you are having an enjoyable summer.
The BLUE LINE INVESTING® (BLI) investment process was founded on over 95 years of stock market history. It seeks to identify and align investment decisions with multiyear trends. Various aspects of this process have been illustrated in my book Protecting The Pig: How Stock Market Trends Reveal the Way to Grow and Preserve Your Wealth.
The S&P 500 Index is one of the most commonly followed equity indices, and many consider it one of the best representations of the U.S. stock market, and a bellwether for the U.S. economy. It is comprised of 500 large companies having common stock listed on the NYSE or NASDAQ. The volatility (beta) of the account may be greater or less than the index. It is not possible to invest directly in this index.
Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volumes. Technical analysis attempts to predict a future stock price or direction based on market trends. The assumption is that the market follows discernible patterns and if these patterns can be identified then a prediction can be made. The risk is that markets may not always follow patterns. There are certain limitations to technical analysis research, such as the calculation results being impacted by changes in security price during periods of market volatility. Technical analysis is one of many indicators that may be used to analyze market data for investing purposes and should not be considered a guaranteed prediction of market activity. The opinions expressed are those of BLI. The opinions referenced are as of the date of publication and are subject to change without notice. BLI reserves the right to modify its current investment strategies based on changing market dynamics or client needs.
Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. Forward-looking statements cannot be guaranteed.
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